Canola grower organizations say Bayer’s proposed acquisition of Monsanto is “a cause of serious concern to Canada’s canola farmers” due to the consolidation that would occur in the canola seed, trait and crop protection markets.
The Canadian Canola Growers Association, along with the Alberta Canola Producers Commission, SaskCanola, the Manitoba Canola Growers Association and Ontario Canola Growers Association, issued the following statement on Monday:
The recent announcement of a merger agreement between Bayer and Monsanto is a cause of serious concern to Canada’s canola farmers. The merger would combine two leading players in Canada’s agriculture industry, significantly reducing competition and consolidating market share in the canola seed, trait and crop protection business.
Canola is an extremely important crop to the long-term economic and environmental sustainability of 43,000 Canadian grain farms. Canola farmers are especially concerned about the effect of the merger on the offerings that will be available to them in the future. A reduction in competition could potentially increase crop input prices, curtail product choice and diminish the incentive for future innovation in canola seed and chemistry.
The Competition Act and its enforcement agency, the Competition Bureau, have established review procedures for determining the impact that proposed corporate mergers will have on competition in a sector of the economy. The regulator has the power to impose actions, conditions or require divestitures in a merger agreement to ensure competition is not substantially lessened.
Associations representing canola farmers at provincial and national levels, call for a timely and rigorous review by the regulator of the merger’s impact on competition in the canola sector in general, and more specifically at the farm gate. The associations will work with the regulator to ensure canola farmers’ concerns are voiced and that the impact of the merger on canola farmers is fully understood.
As noted in this discussion about the possible marriage, Bayer and Monsanto together hold at least 70 percent market share in the canola seed business and 95 percent of the herbicide-tolerant canola trait business.
The deal is subject to regulatory approval in around 30 countries or jurisdictions. Bayer AG’s CEO Werner Baumann wouldn’t shed any light on whether they expect to divest assets to receive these approvals.
“The overlap question, it is so obvious that we don’t even have to comment on it,” he joked in a media conference call last week. “I have to ask you for your understanding that we don’t want to pre-empt a regulatory discussion.”
A document for Bayer’s shareholders said “we have committed to undertake a certain level of divestitures if required by regulatory authorities.” Bayer has also committed to a US$2 billion reverse antitrust break fee if the deal doesn’t go ahead.